May 28, 2015
Russia and China recently have signed and executed a number of large-scale economic and military agreements - enough to make Russia's own so-called pivot to Asia, and toward the dynamic Chinese economy, seem a success. Multi-billion dollar oil-and-gas agreements and recently concluded Sino-Russian naval exercises in the Mediterranean Sea point to strengthening relations between these major Eurasian powers. For Russia, the growing relationship presents many challenges. Foremost among these for the Kremlin is to ensure that such a relationship is balanced, and does not make of Moscow a junior partner to Beijing just as Russia seeks to re-establish its global prominence.
China's vast geopolitical and economic potential certainly entices Moscow - but Russian leaders have to worry that China will seek to use Russia as a means to its own imperial ends. Russian dailyKomsomolskaya Pravda recently interviewed Professor Alexei Maslov, head of the School of Oriental Studies of the National Research University - Russian Higher School of Economics, to put a measure on Russia's tightening embrace with China.
Referring to the Russian agreement to deliver natural gas via pipeline to China for the next several decades, Maslov said "it will cost nearly 1 trillion rubles to build (the pipeline) - but this is a government strategy and we are laying the foundation for an energy relationship for the next 30 years. However, we are not replacing our European deliveries - this project simply augments our existing energy posture."
When KP inquired about the ever-sensitive topic of whether Russia could become a rentier state under China's inevitable economic dominance, Maslov said that in order to change the current economic reality wherein Russia delivers the natural supplies that fuel Chinese consumer technology, "it is necessary to attract Chinese investments in our country, to establish joint ventures. The Russian Direct Investment Fund, for example, has recently transferred to China a number of priority investment projects in which China could invest...such as the construction of strategically important factories, development of land, and raw materials deposits. We are already allowing Beijing to become deeply involved in our economy, and Chinese investments in these areas should be around $20 billion. But so far, Chinese investment during the years of our bilateral cooperation amounts to less than $5 billion. We need a breakthrough."
Can Russia diversify its economy?
When asked to clarify how Russia can change its current economic pattern and emerge with a stronger and more diversified development model, Maslov confirmed the existence of several regional development projects where "China will use its own technology and investments, but 80 percent of products for the construction will be manufactured in Russia. That way, we will get the necessary technology for industrial development - in fact, Russia has finally started doing what China did in the 1980s" to attract foreign investment and spur economic growth. When KP implied that China's recent New Silk Road Initiative could rescue Russia from its current economic crisis, Malsov was dismissive:
"China will only solve its own problems - and we need to look where our interests intersect. For example, this Silk Road is the creation of a huge space that profits China on the territory of many countries. It will include financial cooperation, as well as infrastructure and political integration... and China is willing to fund this gigantic infrastructure to facilitate their access to foreign markets. Our nation is a key component of the initiative, but until recently it competed with Russia's own leadership of the Eurasian Economic Union. This May, we finally were able to create a formula for coordination of these projects. But this Silk Road is not just about the infrastructure - it is a model of a new world order that China offers to all countries."
The Chinese model or the American model?
Maslov said the Chinese model resembles American economic dominance at its height, with the key difference that China will not use it as a vehicle to spread its model of "Confucian socialism" or impose its own ideology. "Soon we may have a situation where China will dictate oil and commodity prices without actually mining for these resources on its own territory. But they want more - and Russia is included in this model to achieve Beijing's goals. Now we need to understand what we ourselves want from China and how to get there," he said.
Lack of academic (and broader) understanding of China as a state is cited as a major gap in Russia's perception of its rapidly developing neighbor. According to Maslov, following the Cold War, Russia was "unprepared for the rapprochement with China. We have very few really knowledgeable specialists on East Asia. Our companies have rushed to China for loans, investments, without realizing that these are not the Europeans, with whom we have a similar way of thinking. There's a totally different business culture and mentality in China." He lamented the fact that the U.S. government, unlike Russia, invested hundreds of millions of dollars in the 1990s on China-centric think tanks, and in the training of specialists.
Maslov dismissed the oft-cited concern that China will absorb Russia economically and might even physically conquer entire regions such as the Russian Far East. But he cautioned that Russia needs to develop its own economy to prevent such a scenario: "We already have several regions that, in essence, only work with China. That is why it is important to build a gas pipeline to China - our social and economic development will follow this project and revitalize the country. If we don't do that, some Russian territories may really go to China - but not through physical capture."
Maslov advocates for closer Russian engagement with China's neighbors - countries such as Indonesia, Malaysia, Thailand, and Vietnam. In how own words, in order to prevent Russia and Europe from "losing voice in the coming Sino-American bipolar world order, Russia needs to have closer relations with Europe. We need both East and West."
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